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SOCAR and RWE Dea sign memorandum

10 March 2010 08:38 (UTC +04:00)

Commercial negotiations will follow the signing of the memorandum, the official told Reuters on Tuesday. He declined to be identified or to disclose further details of the deal.

The chief executive of RWE, Jurgen Grossmann, said late on Monday he would fly to Azerbaijan on Tuesday to sign a gas exploration contract.

RWE leads a consortium of planning to build the 31 billion cubic meter capacity Nabucco pipeline to bring Caspian gas to Europe, but needs to secure gas to fill it in the face of stiff competition for Central Asian gas from China and Russia.

The Nakhichevan deposit is located 90 km (55 miles) south of the Azeri capital, Baku, at a depth of 400-600 meters below the surface of the Caspian Sea. It was first discovered by Azeri oil explorers in 1960 and prepared for drilling as recently as 1994.

According to preliminary government estimates, Nakhichevan may contain up to 300 billion cubic meters of gas.

RWE is one of the shareholders in the planned Nabucco pipeline, aimed at transporting Caspian and Central Asian gas via Turkey and the Balkans to Europe.